Cyberattacks against cryptocurrency exchanges are unfortunately, somewhat common now. Such exchanges are finding out that they need to continue to pay attention to security on a regular basis. If not, hackers are become more evolved than the exchanges’ defense mechanism, and this results in hacks and loss of funds.
Another common instance is for the customers to lose those funds altogether – which might just have reminded you of Mt Gox, an incident that is still painful for people associated with it.
However, what is not so common in these situations, is the news of such exchanges, actually reimbursing a large portion of the amount of stolen funds back to their customers. Which may be why the news of a recently hacked exchange giving the affected customers most of their money back, was a breeze of fresh air.
What makes the effect more profound is the fact that the incident in which the funds were lost is being reported as one of the biggest thefts of cryptocurrencies ever.
Details about the incident
Two days ago, the cryptocurrency industry was shaken when Japanese cryptocurrency exchange, Coincheck, reported that it had fallen prey to a massive cyberattack. The Coincheck Hack caused the exchange to lose over $530 million in NEM coins.
After the last couple of days in which the exchange’s users went through grief, anger and frustration, the exchange announced that it would reimburse around 90 percent of the amount that it lost to the hacking incident.
In an official statement released after the hack, the Tokyo based exchange explained that it would be reimbursing around 260,000 customers that had been affected by the hack.
A timeline or complete method was not defined by the exchange for the reimbursement process at the time, but the statement did explain that customers will be repaid in Japanese Yen through their Coincheck wallet.
It was also mentioned that the capital will be “derived from company funds.”
In the statement, the exchange also offered its apologies to its customers for the distress that the situation had caused them with the hack and the subsequent suspension of services faced by the exchange.
However, the exchange assured its users that its staff, is doing all it can, to determine the details of the transfer that took place with the hack. It also stated that it is currently working on revamping and restructuring its security functions in order to ensure that such an instance does not happen again.
The exchange also mentioned that it is also deploying efforts to register with the Financial Service Agency (FSA) – which is a financial regulatory authority in Japan – as a “Virtual Currency Exchange Service Provider.”
Order from the FSA
Soon after the incident, Coincheck received an official order from the FSA, that asked the exchange to put its affairs in check.
The exchange explained to its customers that it has accepted the terms of the order and is looking into its business practices while also working to clarify the details of the case in order to ensure that it could determine a cause of the breach and strengthen its security definitions further.